Stocks and oil futures tumbled and Japan’s yen hit its highest intraday level against the dollar since October 2014, as investors struggled to reconcile recent market gains with unease over the pace of global growth.

The latest tumult erupted after the Reserve Bank of Australia on Tuesday cut its benchmark rate by one-quarter of a percentage point to 1.75%. The move reflects soft inflation and economic sluggishness driven in part by weak demand from China, the largest buyer of Australian exports. Adding to concerns were a drop in Chinese manufacturing and signals that eurozone growth is slowing more than previously forecast, traders said.

Tuesday’s developments reflect worries that have shadowed a surprising 2016 recovery in the prices of stocks and many commodities. Global growth has slowed this year, prompting major forecasters to cut their outlooks. Yet in recent months the decline of the U.S. dollar and easier policy from global central banks have helped fuel gains in many riskier assets, allowing the Dow industrials to recover from a decline of as much as 10% earlier this year.

The action has vexed many portfolio managers and traders, who came into the year expecting the dollar to gain against the yen and euro as the Fed prepared to further tighten its policy and its peers loosened theirs.

Instead, both currencies have surged against the dollar. The dollar fell as low as ¥105.53 during trading Tuesday before retracing to ¥106 later in the session. The dollar traded at ¥120 at the start of the year, according to CQG. The gains threaten to add to economic turmoil in the world’s third-largest economy while deepening investors’ anxiety.

“The financial markets are on edge,’’ said
Jack McIntyre,
portfolio manager at Brandywine Global Investment Management, which had $71 billion in global assets under management at the end of March. ”Economic growth is still hard to come by.’’

On Tuesday the Dow dropped 140 points to 17751, putting it down 0.1% for May. Selling was more intense in Europe, where major stock indexes fell 1.9% in Germany and 1.6% in France.

Nymex crude dropped $1.13 a barrel to $43.65, while gasoline futures in New York slid 3.4% in their biggest decline since February. Gold slipped $4 to $1,291.80 an ounce and silver, one of the markets’ biggest gainers in recent weeks, dropped 1%.

One victim of Tuesday’s reversal: wagers on higher inflation, which had risen recently amid the rebound in crude oil and signs of strength in U.S. consumer and factory prices.

The 10-year break-even rate, or the yield spread between the 10-year U.S. Treasury note and the 10-year inflation-protected Treasury note, fell by about 0.04 percentage point to 1.65 percentage point, down from this year’s peak of 1.72 percentage point set last week.

The yen was down fractionally on Tuesday, but it remains the market’s best-performing major currency in 2016, even though Japan is trying to stave off its second recession in two years and the
Bank of Japan
this year shocked markets by adopting negative interest rates.

Negative rates have been embraced by central bankers seeking to bump up inflation and wary of currency appreciation, which tends to slow domestic economic growth by making exports costlier. But the BOJ’s move in January had the opposite effect, in part due to the yen’s long-standing role as a haven currency.

”The yen has defied the traditional thought process that applies to currencies,” said
Alvise Marino,
a strategist at Credit Suisse. “The market has struggled with this.”

The yen’s surge is one more example of how the popular trades of the past few years have reversed. Other examples include gold, which rallied 16.5% to its best quarter in three decades after three consecutive down years, and oil, which has come roaring back with a 67% rally from its lows after a sharp drop in 2015. Emerging markets, another losing trade for years, also have climbed.

Speculators pushed bullish bets on the yen to records in April, according to Scotiabank and Commodity Futures Trading Commission data. In the week ended April 26, bullish positions on the yen were worth $7.47 billion, the highest level among the nine currencies tracked by Scotiabank.

The latest gains come in the wake of the BOJ’s unexpected decision last month to hold policy steady, wrong-footing those who expected easier policy. The BOJ has warned of the risk of a strong yen in recent years in a bid to boost growth. Goldman Sachs analysts said last month the strong yen posed an “existential challenge” to the BOJ.

Japan’s currency has been tough to predict for other Wall Street banks. Analysts began the year forecasting that the dollar would rise about 5% to ¥126 by midyear, according to Thomson Reuters data.

At the same time, much of the yen’s recent strength comes at the hands of Japan’s $1.2 trillion Government Pension Investment Fund and other giant domestic institutions, analysts said.

Years of government policies geared toward a weaker yen had left Japanese institutions with big holdings of foreign assets. As the Japanese currency rallies, many are rushing to trim their exposure to foreign exchange and buy more yen, said
Alan Ruskin,
head of G-10 foreign-exchange strategy at Deutsche Bank.

The yen’s gains have turbocharged another unlikely winner, bets that Japanese government bond prices would rise, sending yields to even lower levels.

A U.S. investor who changed out dollars for yen at the end of last year, bought and held Japanese government bonds until this week and then changed yen back to dollars would have earned 17.3%, including changes in the currency pair, according to calculations by
Peter Tchir,
head of macro strategy at Brean Capital LLC.

A U.S. investor who bought 10-year U.S. Treasurys would have earned 5% during the same period. Buying a German 10-year bund would have returned 10.9%, Mr. Tchir calculates.

Corrections & Amplifications

Japan is trying to stave off its second recession in two years. A previous version of this article misstated that Japan is in its second recession in two years.